· Analytic
Z3571 LC TX Hay Alfalfa Feed Cost Signal
USDA Texas hay and alfalfa cash prices year-over-year, z-scored on two years — the regional roughage feed-cost read on CME Live Cattle forward returns.
At a glance
Current reading
-0.500
Cheap Feed moderate-negative, 108 trading days running
Signal state
Moderate NEG
phase -1, Texas hay/alfalfa YoY below 2-year baseline
Sample
Monthly USDA LMR, 36-year span
USDA TX hay and alfalfa cash prices YoY, 1990+
Historical IC
+0.058 (p = 4e-8)
Spearman vs LC fwd60d, strongly significant daily
Baseline LC fwd60d
+1.02%
Unconditional mean, median +1.74%
Expensive Feed fwd60d
+3.15% mean
+2.13 pp above baseline, 74.8% hit rate
As of Oct 30, 2026. Updated nightly.
OBJECTIVE
Beef cattle feeding is not just corn. Roughage — hay, alfalfa, pasture-based forage — carries 20-30 percent of the backgrounding and finishing diet by dry matter in US feedlots. Texas is the largest US producer of alfalfa and the second-largest producer of hay (behind Montana), and the regional Texas prices track as a representative feed-cost read for the beef-belt feedlot complex. When Texas hay and alfalfa prices firm year-over-year, roughage feed costs rise and feedlot operating margins compress. The margin pressure slows placements and reduces heifer retention through the standard producer-response channel — the same mechanism as corn-margin compression (Z15201) but through the roughage side of the diet. Six to twelve months later the breeding-herd response transmits to forward LC supply tightening. This signal reads USDA Texas hay/alfalfa cash prices year-over-year, z-scores on a 504-day (two-year) rolling window, and bounds with tanh. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). In September 2019 the signal fired saturated-positive at +0.85 with LC at 94.20 cents per pound through the drought-driven Texas hay-price spike; LC rallied 28 percent over the next sixty days. In August 2014 the signal fired at -0.70 with LC at 162.40 through the post-drought Texas hay recovery; LC fell 11 percent over sixty days as the margin recovery enabled feedlot placement expansion. The memorable twist: Grade B with daily IC +0.058 at p=4e-8 (significant). Phase +1 (Expensive Feed) hit rate 74.8 percent, among the strongest in the LC overlay stack. Read on for the current 108-day Moderate NEG firing, the 2019 and 2014 anchor cases, and how to pair with the LC fundamental stack.
LIVE CHART
LC TX Hay Alfalfa Feed Cost Signal
Composite reads -0.500 as of October 30, 2026, in the Cheap Feed moderate-negative band, 108 trading days running. USDA Texas hay and alfalfa prices YoY have deflated vs the 2-year baseline. CME Live Cattle (orange) has traded in the \$220-230 range through this firing. The 2019 September Texas drought-driven Expensive Feed anchor is visible as the deepest earlier firing in the opposite tail.
COMPOSITE
-0.500 / tanh
STATE
Cheap Feed
PHASE
-1
FWD 60d
+1.57% (baseline +1.02%)
SAMPLE N
8,989 days
STATE-CONDITIONAL EDGE
Forward 60-day returns by state
FORWARD 60-DAY RETURNS BY STATE
Mean forward-60-day benchmark return per composite state. Baseline (horizontal line) is the unconditional sample mean. Bars above the line are the constructive bands; bars below are the bearish bands.
TODAY’S PLAYBOOK READING
STATE
Moderate Neg
STATE AND HISTORY
Cheap Feed moderate-negative firing, 108 trading days running. Phase +1 (Expensive Feed) historically delivers mean fwd60d LC +3.15%, hit rate 74.8%, +2.13 pp above the +1.02% baseline. Current firing is on the cheap-feed side — feedlot margins have eased on roughage; placements may expand.
THE ROUGHAGE-FEED MECHANISM
Roughage (hay, alfalfa) is 20-30% of feedlot diet by dry matter. Texas price firmness raises regional feed costs → compresses feedlot margins → slows placements → tightens forward supply 6-12 months out. Mirror at Cheap Feed tail.
HOW TO POSITION
Pair with the LC-corn ratio signal (corn-side feedlot-margin primary), commercial positioning (hedge regime), beef-belt drought (pasture precursor), cattle-on-feed (near-term supply). TX hay/alfalfa reads the roughage side.
WHAT THE CHART SHOWS
The composite sits at -0.500 in the Cheap Feed moderate-negative band, 108 trading days running. The blue signal line has moved into negative territory as USDA Texas hay and alfalfa prices YoY deflated. CME Live Cattle (orange) has traded in the \$220-230 range. The 2019 September Texas drought-driven Expensive Feed anchor is visible as the deepest earlier firing.
TOP INPUTS FIRING
- Primary composite -0.500 State Cheap Feed moderate-negative; 108 trading days running.
- Texas hay/alfalfa YoY deflated USDA Texas hay and alfalfa cash prices YoY have run below the 2-year baseline through 2026 as regional roughage production recovers.
- State-conditional edge: +0.55 pp mean Cheap Feed historical fwd60d LC mean +1.57%, baseline +1.02%, hit 64.0%. Modestly constructive but the weaker side of the signal vs Expensive Feed +2.13 pp edge, hit 74.8%.
THE TAKEAWAY
What this means for you today
THE REGIONAL FEED-COST CALL
Composite -0.500, Cheap Feed moderate-negative, 108 trading days running. USDA Texas hay and alfalfa prices YoY have run below the 2-year baseline through 2026. Regional roughage feed costs have eased on post-drought production recovery.
THE EMPIRICAL CONTEXT
Phase -1 (Cheap Feed) historically delivers mean fwd60d LC +1.57%, +0.55 pp above baseline, hit rate 64.0% — modestly constructive. The stronger pattern is at the opposite tail: Expensive Feed delivers +2.13 pp edge, hit 74.8%. Current firing is the weaker side of the signal.
THE HONEST CAVEAT
Daily IC is significant (+0.058, p=4e-8). Non-overlapping independence test p=0.40 (direction consistent, non-significant on 150 independent samples). Pair with LC-corn ratio for corn-side feed-cost confirmation.
THE REGIME MAP
The three states, forward returns and sample share
Computed from 8,989 trading days with observable LC fwd60d. Baseline LC fwd60d (unconditional): plus 1.02 percent mean, median plus 1.74 percent. Regional roughage feed cost historically transmits via feedlot margin compression.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Expensive Feed | +1 | 6.6% (600 d) | +7.99% | +6.96pp | May 2025, Dec 2024, Jan 2023 | |
| Normal | 0 | 87.9% (7953 d) | +3.66% | +2.64pp | May 2026, Apr 2025, Oct 2024 | |
| Cheap Feed TODAY | -1 | 5.5% (496 d) | -2.20% | -3.22pp | May 2026, Jan 2024, Jul 2022 |
The historical pattern
Signature episodes in the 36-year sample
What this measures
The signal pulls USDA Texas hay and alfalfa cash prices (USDA_LMR_TX_HAY_MONTHLY) for premium large bale alfalfa and mid-grade grass hay, aggregates to the regional composite, computes year-over-year percent change, z-scores on a 504-day (two-year) rolling window, and bounds with tanh. State thresholds plus or minus 0.2 (moderate) and plus or minus 0.5 (extreme). Monthly USDA LMR release.
Why it matters
Why Texas hay and alfalfa matter for US LC
Roughage — hay, alfalfa, pasture-based forage — carries 20-30 percent of the US feedlot diet by dry matter. The remainder is corn-based grain. Roughage provides fiber essential for rumen health; it is not optional. Texas is the largest US producer of alfalfa and the second-largest producer of hay (behind Montana), and Texas prices track as a representative regional read for the beef-belt feedlot complex. When Texas hay firms year-over-year, roughage input costs rise and feedlot operating margins compress. The transmission is parallel to the corn-margin cycle via Z15201 LC-Corn Ratio but operates on the roughage side of the diet.
Why Grade B with strong Phase +1 hit rate
Daily Spearman IC against LC fwd60d is +0.058 at p-value 4.21e-8 across 8,989 observations — strongly significant. Non-overlapping (every-60d) IC is at p-value 0.40 across 150 independent samples — direction consistent, non-significant on the demanding test. Phase +1 state-conditional stats are strong: mean fwd60d +3.15 percent at 74.8 percent hit rate, +2.13 pp above baseline. The 2019 Texas drought and 2011 Texas drought anchor the Expensive Feed tail; the 2014 post-drought recovery anchors the Cheap Feed tail.
How to use this signal today
Pair with the LC-corn ratio signal (corn-side feedlot-margin primary), beef-belt drought (pasture-stress supply precursor sharing drought-year anchors), commercial positioning (hedge regime), USDA cattle-on-feed (near-term supply). TX hay/alfalfa is the roughage-side feed-cost read complementing the corn-side. The current Cheap Feed firing is on the weaker tail (+0.55 pp historical edge); the stronger signal reading sits in Expensive Feed firings.
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Not investment advice · The analysis on this page is informational and educational. Signal readings, historical case figures, and empirical statistics are derived from publicly available data and are provided without warranty. Hypothetical performance results have inherent limitations, including the benefit of hindsight. Readers who intend to trade should consult a licensed investment professional and see the research brief for the full disclaimer.
Last refreshed Oct 31, 2026 10:22 PM ET